What Is the Law of Diminishing Marginal Product?
The law of diminishing marginal product or productivity is an economic theory. It proclaims that increasing one input constant and maintaining other inputs constant helps in increasing the output initially. A further increase in the input has a restricted effect and ultimately has no consequence or a pessimistic effect on the output.
The law of diminishing marginal productivity helps in understanding why increased manufacturing is not always the best way to increase profitability.
What Is the Law of Variable Proportions?
The law of variable proportions is based on the theory that when the quantity of a variable factor is increased or decreased while keeping other factors constant, there will be a change in the proportion between the two factors. It is referred to as the law of variable proportions in the theory of production.
It is also known as the law of proportionality. It is mainly concerned with the changes in output that are observed when there is an increase or decrease in the units of a variable factor.
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